March 28, 2024

Economix: Core Inflation Rises, but Is Still Low

Friday’s inflation report was mostly as economists expected it to be. Core inflation — which excludes food and energy prices and is a better guide to future inflation — rose slightly less than expected, but only slightly.

How worrisome is core inflation? The Federal Reserve certainly needs to watch it. If it continues to accelerate, that would suggest the Fed may need to raise interest rates sooner than it now plans. But core inflation remains very low historically. Here it is over the last three months, compared with historical trends:

Bureau of Labor Statistics, via Haver Analytics

And here it is over the last year, again compared historically:

Bureau of Labor Statistics, via Haver Analytics

The recent signs of economic weakness remain a much bigger risk than inflation.

Article source: http://feeds.nytimes.com/click.phdo?i=71934cb71b69d7247518c3e34f8a2b3f

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